China's Pirate Industry Thriving ; for $1.20, Buy DVDs of 'Fellowship of the Ring' or 'A Beautiful Mind.' or Bargain Reeboks at $8

Article excerpt

"Treasure Street" used to be a makeshift outdoor market in
Beijing - a place where Russian and East European buyers would come
to spend $50,000 a pop for planeloads of fake Nike shoes, Gucci
bags, and North Face jackets.

Today, Ya Bao Lu, as it is known in Chinese, is a seven-story
modern building. Inside, some 300 private showrooms sport the latest
fashions behind blue curtains that say "Don't Enter Unless Invited"
(although no one ever stops you). Each room represents a factory in
China, and each owner offers to duplicate and deliver whatever
products you want, in any quantity. If you want the popular new
Allen Iverson Reeboks - they will cost $8 a pair in lots of 24. For
big orders, allow a week.

Technically, under China's Dec. 11 WTO accession, and under new
Chinese laws, such counterfeiting is both illegal and easier to
prosecute. The copyright and patent laws range from films and
software to acrobatic acts and architectural designs.

But in recent years, the culture of counterfeiting in China has
expanded. Nearly everything is available - from college diplomas, to
shampoo, batteries, and car-inspection stickers. The Chinese
themselves joke that in China, "everything is fake but your mother."
If you want Windows XP software, the cost is $3.50. Textbooks at
prestigious Beijing University are mostly Xeroxed, as are many
Western titles in the library at the China Academy of Social
Sciences. If you want a DVD copy of "A Beautiful Mind" or
"Fellowship of the Ring," no problem. They are on sale for $1.20 by
locals outside banks, coffee shops, and department stores.

"WTO? I don't care about the WTO. Winter is here and sales are
good," says the owner of a coat shop at Treasure Street who fronts
for a factory outside Shanghai. "As far as you want to do business
with me, I can make whatever you want." That includes, he says,
adding name-brand labels.

Some Western analysts feel the new laws will allow Beijing to
slowly crackdown, python-like, on the practice. Seminars on legal
antipiracy measures are regularly sponsored in five-star hotels.
Police hold frequent bonfires outside factories that are caught
duplicating tapes, CDs, DVDs, and software. Some 33 million pirated
items went up in flames last year, according to Xinhua, the official
Chinese news service.

Yet no real curb on piracy is expected in the short term, for two
main reasons.

First, the scale, capability, and techniques of the
counterfeiting industry have outstripped any official punitive
action. They are better made and harder to detect. Sometimes they
are "off the books" production overruns of authentic products that
go out the back door for cheaper sale. Some factories now
manufacture real goods in one part of the site and fakes in another.

Second, the piracy industry in China has grown into a vital
shadow economy. By some estimates, piracy directly or indirectly
employs 3 million to 5 million people, and brings in between $40 and
$80 billion. At a time when unemployment is on the rise, experts say
it is simply impossible to put a quick end to the piracy industry
for reasons of social stability. And this is to say nothing of
kickbacks to police or officials who allow the practice to continue,
or threaten "raids" or "busts. …